​EMV: Why the world adopted it

It has been just over six months since Australia mandated chip and PIN technology, and the country is already moving beyond using EMV-enabled cards to make contactless payments.
Written by Aimee Chanthadavong, Contributor on

The first time contactless payment technology made its way into the world market was in the early 2000s, when MasterCard announced that it had plans to simplify debit and credit card transactions for consumers. It introduced EMV (Europay, MasterCard, Visa) chip technology, where micro computer chips are embedded into each card.

For Australia, it made headway when some of the country's leading banks and supermarkets began rolling out payment terminals to accept the then-new form of payment.

Visa estimates that there are now more than 100,000 contactless terminals, and over 75 million contactless transactions made per month within Australia. Additionally, 60 percent of all face-to-face payments are now contactless in Australia.

Similarly, MasterCard has over 320,000 MasterCard terminals that accept tap-and-go-enabled cards in stores, including Coles, Woolworths, JB Hi-Fi, and 7-Eleven.

So what is it about using EMV-enabled cards that has Australians tapping and going?

Firstly, there's the appeal of the security benefits of chip and PIN cards. Each contactless transaction is identified by its own unique identifier. This 16-digit number is generated by a contactless-enabled terminal for every tap, making it almost impossible to replicate. Also, given that when a tap-and-go transaction occurs, the card often never leaves the hand of the consumer, making it less likely for it to be stolen.

Secondly, speed and convenience is another huge factor. Consumers no longer have to wait for the magnetic strip on their cards to be swiped through a payment terminal before being requested to sign or enter their PIN for verification. The only occasions that consumers are required to enter their PIN for verification, after choosing to tap and go, are for payments valued higher than AU$100.

Australia has realised the benefits that EMV provides, and decided back in August 2014 to mandate chip and PIN across all card payment terminals in Australia as a way to completely phase out signatures as a form of verification for credit and debit card payments, something that the US is only about to commence in the coming months.

However, Australia was not alone to have made this migration. Countries in Europe, the United Kingdom, Canada, Latin America, and Asia have also widely adopted chip-enabled smartcards, mainly as a way to tackle card-skimming scams.

The benefits have been so rewarding for Australia that the country's dependence on contactless payments has begun moving beyond using EMV-enabled cards. In fact, consumers are now increasingly using their near-field communication (NFC)-enabled smartphones to conduct contactless transactions.

Data from Westpac had forecast that contactless payments via mobile would reach just under a whopping AU$3 billion by the end of this year.

Westpac head of everyday banking Andy Kerr previously told ZDNet that devices integrated with NFC technology will become more prominent, as it's going to make tap-and-go transactions even faster and more convenient for customers.

"Contactless payments on the phone, particularly for customers that are 18 to 35, they're out and about and they always have their phone, and they want to be able to keep going whether they have their wallet with them or not. That was at the heart of allowing customers to make contactless payments, which we knew they loved," he said.

Lisa Frazier, Commonwealth Bank of Australia executive general manager digital channels, had previously said that there is evidence Australia has a large appetite for technology and mobile banking solutions.

"I think we know from just the contactless card usage in Australia we are far more advanced; we're actually leading the world as a percentage per capita," she said.

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